Frankfurt Set To Provide First-Ever Excitement

No one has ever feared missing out on something in Frankfurt. No one enjoying a beer on a Cologne plaza or in a Munich brauhaus has ever said, “This is great, but it would be even better with a view of the Main.” No one gazing upon the splendor of Dresden’s rebuilt Alstadt thinks, “I’d really rather see that string of malls and department stores they built on what used to be the largest medieval city center in Germany.” Certainly, no one gorging on the culinary scene in Berlin longs for Handkäse, mit or ohne Musik.

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Some people in Frankfurt, however, are quite fearful of missing out—on the opportunity to do something should the global or local economies take a nosedive. So they are going to do something about it. And that is giving some other people—hedge funds, or as they are known locally, locusts—not exactly FOMO, but the first-ever excitement for something out of Frankfurt.

"Fear of Missing Out" is typically used to describe investors chasing stocks higher without conviction that further gains are justified by company fundamentals. But the same epithet can be applied to the guardians of monetary stability…. The Federal Reserve has made every other central bank jealous. By raising official interest rates several times, it's given itself elbow room to ease monetary policy if the economy nosedives. Its peers don’t have that luxury. And they're gagging to hike….

Economists are anticipating higher German yields in the coming quarters. A shift toward ECB policy normalization should shake euro-denominated government bonds out of the range that's seen benchmark bund yields trapped in a range between 0.2 percent and 0.8 percent for the past year — and that should hand more opportunities for profit to macro hedge-fund.